EMERYVILLE, Calif., Dec. 14 /PRNewswire-FirstCall/ -- LeapFrog Enterprises, Inc. , today announced changes in its SchoolHouse(TM) division to return it to profitability and to more closely align it with the Company's consumer strategy.
"Going forward, the SchoolHouse division will focus on what we do well and what we are known for -- innovative technology-based approaches to early literacy and reading," explained Jeffrey G. Katz, president and chief executive officer of LeapFrog. "As a result, we are reducing the size of our SchoolHouse organization and focusing our sales and product development resources on reading curriculum for core grade levels. With these changes we expect the division to be profitable in 2007."
Highlights of the plan that began its implementation today are:
-- LeapFrog's successor products to the LeapPad(R) Learning System, which
are in development for introduction in 2008, will also be sold in the
school market. The LeapPad platform will continue to be sold and
supported as required by current school customers.
-- The SchoolHouse division will continue to create and market
curriculum-based content developed specifically for schools. The
division will continue to market and support core products including:
LeapTrack(R) system, The Literacy Center, Language First!(TM), the
Interactive Library, key pre-kindergarten programs, and other new
products offerings that strengthen the reading product line.
-- The LeapTrack(R) system, LeapFrog's assessment tool for standards-based
assessment and instruction, will be adapted as an online tool for 2008
launch. LeapFrog's research and development teams will continue to
support the product's capabilities to ensure that schools using them
will see improved student achievement, as required by their annual
yearly progress goals under the No Child Left Behind Act.
-- LeapFrog's curriculum, editorial, and state standards alignment
processes, which are core to both its consumer and SchoolHouse
products, will be integrated into the Company's overall product
development organization.
-- Though smaller in size, the SchoolHouse division will continue to have
a significant direct sales force to support its key accounts across the
country. Additionally, the Company will strengthen its catalog and Web
sales efforts to more effectively cover smaller accounts where a direct
sales force proved too costly.
With these changes, Jessie Woolley-Wilson has decided to leave LeapFrog to pursue other interests. Mike Lorion will replace her as head of the LeapFrog SchoolHouse division, effective immediately. Mike brings with him nearly 30 years of sales and marketing experience in the education and technology industries with companies such as Palm Computing and Apple Computer.
As a result of these actions, the Company will cut the division's operating expenses in half, mostly through a headcount reduction of approximately 60 people. To effect this change, the Company expects to incur a charge in the fourth quarter of 2006 of about $3 million, or $0.05 per share.
"SchoolHouse remains an integral part of our business and a differentiating capability that also supports our consumer business, and as such, is an important investment priority for LeapFrog," confirmed Mr. Katz. "However, the division's profitability was not satisfactory and therefore was something we had to address. The actions that we have taken will provide a solid foundation for profitability and growth."
About LeapFrog
LeapFrog Enterprises, Inc. is a leading designer, developer and marketer of innovative, technology-based learning products and related proprietary content, dedicated to making learning effective and engaging for all ages, at home and in schools, around the world. The Company was founded in 1995 and is based in Emeryville, California. LeapFrog has developed a family of learning platforms that come to life with more than 100 interactive software titles, covering important subjects such as phonics, reading, writing, math, music, geography, social studies, spelling, vocabulary, and science. In addition, the Company has created more than 35 stand-alone educational products for children from birth to 16 years. LeapFrog's award-winning US Consumer products are available in six languages at major retailers in more than 25 countries around the world. The LeapFrog SchoolHouse curriculum programs are currently in more than 100,000 classrooms across the US with over 200 interactive books and over 450 skill cards representing more than 6,000 pages of educational content. LeapFrog SchoolHouse products have won numerous awards from the education industry, including the Golden Lamp Award and Distinguished Achievement Award from the Association of Educational Publishers, the Award of Excellence from Technology & Learning magazine, and the Teacher's Choice Award from Learning magazine.
NOTE: LEAPFROG, the LeapFrog Logo, LEAPPAD, LEAPFROG SCHOOLHOUSE, LEAPTRACK and LANGUAGE FIRST are trademarks or registered trademarks of LeapFrog Enterprises, Inc.
Forward-Looking Statements
Cautionary Statement under the Private Securities Litigation Reform Act Of 1995:
Except for the historical information contained herein, this news release contains forward-looking statements, including statements regarding the Company's expected 2006 financial results; anticipated financial performance improvements such as expense reductions, expenses incurred and future profitability; anticipated product launches and the availability of future product features; the effectiveness of the Company's products, services and features; and expected future business capabilities. These forward-looking statements involve risks and uncertainties, including the Company's ability to develop and launch new products, services and features on time and at anticipated margin and profit levels; the Company's ability to develop and market products, services and sales channels that are accepted by teachers and schools at sales and profit levels to justify the development investment; the Company's ability to retain effectively key personnel in the SchoolHouse division with capabilities integral to the division's strategy; and the ability of the SchoolHouse division to compete effectively with its competitors, many of whom have longer operating histories, greater brand recognition and more resources than the division. These and other risks and uncertainties detailed from time to time in the Company's SEC filings, including its 2005 annual report on Form 10-K filed on March 7, 2006, could cause the Company's actual results to differ materially from those discussed in this release. All forward-looking statements are based on information available to the Company on the date hereof, and the Company assumes no obligation to update such statements.
Contact:
Sara Lanza Hickman Eileen VanEss
LeapFrog Enterprises, Inc. LeapFrog Enterprises, Inc.
510-596-5406 510-420-5361
